A company ahead of its time

I was an agricultural economics undergraduate at UP Los Baños when Bancom was a familiar name to anyone with a minimum awareness of Philippine business and finance. As a young student then, all I knew was that Bancom was a formidable name in the financial industry, often in the news as a pioneer in the then new field of investment banking. Years later, while on graduate studies abroad, I was to hear of how Dewey Dee’s sudden flight to Canada had left behind a string of huge debts that spelled the downfall of a number of financial institutions, including Bancom.

I didn’t know back then that Bancom was so much more than a financial institution. It was, as envisioned by Dr. Sixto K. Roxas, its founder and leader for most of its 17-year existence, a “total development company” that sought to integrate financial markets with the real economy within its own operations. The legendary “SKR” (“Ting” to close associates and friends) recently completed writing his personal memoirs on the rise and fall of the Bancom Group. Along with it has been compiled a Compendium of Recollections and Tribute Pieces from Bancom Alumni and Friends. The book, to be launched next week, provides an arresting narrative of the contemporary history of the Philippine financial sector, and of the extraordinary men and women who shaped it from their formative years in the fertile training ground that Bancom was for them. Many of these “Bancom alumni” remain prominent movers and shakers, a virtual who’s who in Philippine business and finance.

Bancom endured the tensions that seemed inevitable in an organization that sought to address two types of market opportunities described by Roxas: “One, opportunities created by the peculiarities of regulatory and statutory ground rules that opened up niches offering profits not really related to authentic social and economic services… (economic rents) created artificially by regulations or by special privileges acquired by political means, rather than by genuinely enhanced product or service productivity. Two, opportunities for profits arising from needs that had a substantive developmental and productivity-raising function.”

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He further muses: “The personal philosophies and value orientations of the persons that converged to form Bancom were such as to create an inherent tension between these two markets in the directions of development and growth that the institution would pursue: the merely opportunistic pole and the authentic development pole. These were not, of course, simply black or white choices. The trouble lay in the shades of gray in-between.”

To me, Bancom exemplified the same tensions one now sees in the Philippine economy as a whole: between a burgeoning financial economy that has thrived on speculative gains from global market movements, apart from the first type of profits Roxas describes; and a real economy whose growth has failed to deliver commensurate growth in jobs and reduction in poverty. The idea of directly delivering broadly beneficial (now termed “inclusive”) development while maintaining profitable financial operations was Bancom’s seemingly Quixotic mission. “I was obsessed with the idea of the total development company with the capacity to supply the package of services that would respond to the needs of every community for driving its development along a path that was optimally suited to its endowment of natural and human resources and its state of underdevelopment,” writes Roxas. Bancom, to him, had “a dual mission—to offer product lines of such a wide spectrum that one could always form a package to fit the needs and wants of any community at any stage of development or underdevelopment, and to be able to deliver this at a reasonable cost and profit. This was what the Bancom Group attempted to be, a company that was many things to most people.”

In its heyday, Bancom, aside from being a leader in investment banking and financial services, was into farm machineries, film production, book publishing, farm services, low-cost housing, health services, infrastructure construction, overseas manpower recruitment, steel fabrication, semiconductors, and more. That it tried to do too many things in keeping with its “total development company” vision could have been its ultimate weakness. The reader of Roxas’ and his former colleagues’ reflections would have to be the judge of that. Apart from being a chronicle of the seeming Camelot that was Bancom, the book is a colorful account of the life and ideals of a visionary whose illustrious career spanned academe, public service, industry, development management, financial markets and civil society. His vision and drive infected a distinguished cadre of luminaries in finance and development circles. In his foreword, Bancom alumnus Francis Estrada avers: “The perennial question that reverberated throughout the organization as it sought new solutions to increasingly large problems was: Why not?”

Estrada believes that having foreshadowed subsequent domestic, regional and global economic crises, Bancom’s story offers rich lessons for policymakers, regulators, practitioners and stakeholders in both its successes and (especially) its failures. To the reader who gets a fuller understanding of the company and what it sought to do from the eyes of its leader, the vision behind Bancom may well have been an idea way ahead of its time. In truth, not a few may see it to be ahead of its time even today. But current public discourse on the imperative for inclusive growth and sustainable development suggests to me that it’s an idea whose time has indeed come.